Hogan v. States Recovery Systems, Inc.
ORDER GRANTING 16 Motion for Summary Judgment. Signed by Judge Sam Sparks. (jf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
STATES RECOVE1Y SYSTEMS, INC.,
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause,
and specifically Defendant States Recovery Systems, Inc. (SRS)'s Motion for Summary
Judgment [#16], and Plaintiff Maya Hogan's Response [#191 in opposition. Having considered
the case file and the applicable law, the Court enters the following opinion and order.
This is a case for wrongful debt collection.
Plaintiff Maya Hogan enrolled in the
University of Phoenix (Phoenix) in October 2014. Hogan stopped attending classes at Phoenix
in August 2015. Apollo Education Group ("Apollo"), the parent company of Phoenix, contends
Hogan owes a balance of$ 917.27 for expenses associated with her enrollment at Phoenix.
Apollo referred this debt to SRS on July 25, 2016. Two days later, on July 27, 2016, SRS
requested its vendor send Hogan a letter stating the past due balance of $ 917.27. Mot. Sumin. J.
[#16] Ex. B (SRS Letter). On October 9, 2016, Plaintiff notified SRS she disputed the debt SRS
sought to collect. Mot. Summ. J. [#16] Ex. C (Hogan Letter). Hogan's counsel contacted
Phoenix on October 9, 2016 regarding its debt collection efforts. Resp. [#19] Ex. B-i (Zimmer
Letter). In this letter, Hogan's counsel alleged claims of, among others, fraud, misrepresentation,
and breach of contract against Phoenix. Id.
Phoenix responded by explaining the basis of
Hogan's debt, including a full accounting of the balance owed. Mot. Summ. J. [#16] Ex. D
Hogan filed a lawsuit in Travis County Justice Court, Precinct No.
2016. See Notice Removal [#1] at 10 (Pet.).
on November 22,
Hogan asserts SRS violated the Texas Debt
Collection Act (TDCA) and the Fair Debt Collection Practices Act (FDCPA), in addition to
using unreasonable debt collection practices. Pet.
19-26. SRS removed the case to this Court
on December 22, 2016, invoking the Court's federal subject matter jurisdiction. See Notice
SRS moves for summary judgment on all of Hogan's claims. The motion is fully briefed
and now ripe for consideration.
Summary judgment shall be rendered when the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
Catrett, 477 U.S. 317, 323-25 (1986); Washburn
Harvey, 504 F.3d 505, 508
(5th Cir. 2007). A dispute regarding a material fact is "genuine" if the evidence is such that a
reasonable jury could return a verdict in favor of the nonmoving party. Anderson
Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the
court is required to view all inferences drawn from the factual record in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co.
Zenith Radio, 475 U.S. 574, 587 (1986);
Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh
the evidence" in ruling on a motion for summary judgment. Reeves
Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support
the nonmoving party's case, the party opposing the motion must come forward with competent
summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at
586. Mere conclusory allegations are not competent summary judgment evidence, and thus are
insufficient to defeat a motion for summary judgment. Turner
476 F.3d 337, 343 (5th Cir. 2007).
Baylor Richardson Med. Ctr.,
Unsubstantiated assertions, improbable inferences, and
unsupported speculation are not competent summary judgment evidence.
opposing summary judgment is required to identify specific evidence in the record and to
articulate the precise manner in which that evidence supports his claim. Adams
Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006). Rule 56 does not impose a duty on the
court to "sift through the record in search of evidence" to support the nonmovant's opposition to
the motion for summary judgment. Id.
"Only disputes over facts that might affect the outcome of the suit under the governing
laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248.
Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in
ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing
sufficient to establish the existence of an element essential to its case and on which it will bear
the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
Texas Debt Collection Act Claims
TDCA § 392.2021
TDCA § 392.202(a) sets forth requirements for a third-party debt collector when an
individual disputes the accuracy of a debt being collected. If a third-party debt collector does not
report information related to the dispute to a credit bureau, the collector must "cease collection
efforts until an investigation of the dispute described by Subsections (b)-(e) determines the
accurate amount of the debt,
if any." Tex. Fin. Code Ann. § 392.202(a). However, if the third-
party debt collector reports information related to the dispute to a credit bureau, the collector
must "initiate an investigation of the dispute," and "cease collection efforts until the investigation
determines the accurate amount of the debt, if any." Id.
A "third-party debt collector who
initiates an investigation shall send a written statement to the individual." Tex. Fin. Code Ann.
SRS argues it had no obligation under TDCA
392.202 to conduct an investigation or
send a written report to Hogan because it did not report information related to the dispute to a
Hogan asserts SRS violated TDCA
392.202 by failing to conduct an
investigation into Hogan's December 9, 2016 dispute and failing to furnish a written response to
The Court agrees SRS was not required to conduct an investigation or send a written
report to Hogan under TDCA
392.202. SRS did not report information related to the dispute to
a credit bureau, and therefore was only required to cease collection efforts until an investigation
of the debt dispute was performed. SRS complied with this requirement by ceasing all collection
efforts in response to I-logan's written dispute. Because SRS did not initiate an investigation,
TDA correspond to sections of the Texas Finance Code.
there was no duty to send Hogan a written statement. See Tex. Fin. Code Ann. 392.202(b).
SRS is therefore entitled to summary judgment on this claim as a matter of law.
TDCA § 392.304(a)(8)
392.304(a)(8) prevents a debt collector from using a fraudulent, deceptive, or
misleading representation that employs "misrepresenting the character, extent, or amount of a
consumer debt, or misrepresenting the consumer debt's status in a judicial or governmental
proceeding." Tex. Fin. Code Ann.
To constitute a misrepresentation, the
statement must be false or misleading. Reynolds v. Sw. Bell Tel., L.P., 2006 WL 1791606, at *7
App.Fort Worth June 29, 2006, pet. denied) (citing Black's Law Dictionary).
Hogan asserts SRS violated TDCA § 392.304(a)(8) by falsely representing the status and
amount of alleged debt in communication with Hogan. Specifically, Hogan alleges she owed no
debt because "UoP breached its contract with Hogan
deceived Hogan into enrolling in"
Phoenix. Resp. [#19] at 9. SRS moves for summary judgment, arguing the amount it sought
from Hogan is the amount its creditor-client, Phoenix, communicated was owed.
SRS's reliance on Phoenix's accounting of the amount owed does not itself negate
liability under TDCA
392.304(a)(8) if that amount was incorrect. See Johnson
Bank, NA, 999 F. Supp. 2d 919, 933 (N.D. Tex. 2014) ("A collection notice or balance statement
misstating the amount owed on a debt constitutes a misleading assertion regarding the amount of
that debt under the TDCA."); see also McCaig v. Wells Fargo Bank (Texas), NA., 788 F.3d 463,
480-81(5th Cir. 2015) (holding TDCA
392.304(a)(8) "contains no intent requirement").
The Court nonetheless finds SRS is entitled to summary judgement. The debt in this case
is based in contract between Hogan and Phoenix. See Phoenix Letter (referencing and attaching
the signed Enrollment Agreement). Hogan's claim under TDCA
392.304(a)(8) is premised on
allegations of breach of contract and fraud that she contends extinguished her contracted debt to
Phoenix. In essence, Hogan seeks to litigate her contract dispute with Phoenix as a TDCA claim
against SRS.2 Texas courts have routinely dismissed TDCA claims based on underlying contract
disputes between the parties. See, e.g., Hammond
Ocwen Loan Servicing, LLC, 2014 WL
5326722, at *4 (N.D. Tex. Oct. 20, 2014) (compiling cases barring TDCA claims based on
breach of contract because of the economic loss doctrine). Beyond Hogan's contestation of the
contract she entered into with Phoenix, there is no evidence SRS made false or misleading in its
attempt to collect the debt at issue in this case.
For these reasons, SRS is entitled to summary judgment as a matter of law on this claim.
Federal Debt Collection Practices Act Claims
As Hogan suggests in her brief, the TDCA and FDCPA largely mirror each other. See
Resp. [#19] at 3. Hogan relies on the same arguments discussed above to challenge SRS's
summary judgment on her FDCPA claims. Because Hogan's arguments are unavailing for the
reasons explained above, the Court concludes SRS is entitled to summary judgment on Hogan's
FDCPA claims. For purposes of completeness, the Court finds Hogan has failed to present
evidence that SRS violated FDCPA
1692f or 1692e(2)(A) as alleged in her petition. See Pet.
Unreasonable Debt Collection Practices
SRS moves for summary judgment on Hogan's third cause of action of unreasonable debt
collection practices. Specifically, SRS contends its actions do not fall within the "outrageous
collection techniques" recognized by Texas courts. Hogan does not offer a rebuttal to SRS's
arguments on this claim.
Tellingly, Hogan's complaint does not allege independent causes of action for breach of contract or fraud
against SRS or Phoenix.
The Court agrees Hogan has failed to present evidence SRS used unreasonable debt
collection practices in this case. SRS sent two letters3 to Hogan attempting to collect debt
provided to it by its creditor-client, Phoenix. After receiving Hogan's dispute, SRS ceased all
collection efforts. No reasonable jury could conclude from these facts that SRS used outrageous
aid therefore SRS is entitled to summary judgment on this claim.
IT IS ORDERED that Defendant SRS's Motion for Summary Judgment [#16] is
7day of September 2017.
UNITED STATES DISTRICT JUDGE
Hogan's petition contends SRS sent two letters to Hogan, on in 2015 and another in 2016. Pet. 8. SRS
only describes one letter in the background section of its motion, but later states it sent two letters. See Mot. Summ.
J. at 10. Whether SRS sent oie or two letters to Hogan does not change the Court's conclusion on this issue.
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